Profits over Hunger: Plenty of Food, but Costs are Too High

by douglas reeser on 1.11.11

Food riots have once again come across the headlines, as a substantial increase in food prices has recently led to riots in Algeria, Tunisia, India, China, Indonesia, and Bangladesh. The immediate future does not appear to offer any relief, as the UN Food and Agriculture Organization (FAO) just released a policy brief warning of a "food price shock". The FAO lays blame on a number of factors, including extreme weather events, demands for food commodities from the energy sector, and a growing dependence on export zones among other things. An article in Forbes looks into further details:

The global food situation doesn’t look too promising, as floods in Australia and excessively hot weather in Latin America harm harvests, upward pressure is mounting on prices. According to the FAO, a basket tracking the wholesale cost of food commodities such as wheat, corn, rice, vegetable oils, and meats, has already topped 2008’s peak values. And, as the USDA cuts its global grain supply outlook, soybean, corn, and wheat prices have spiked, nearing or passing 30-month highs.

This rise in prices, however, is not due to simple measures of supply and demand. At play is the insatiable drive for corporate profit. An article from the IPS notes that Cargil, the world's largest agricultural commodities trader, tripled its profits in 2010, and explains how a drive to buy up farmland internationally has led to a sharp increase in many local food markets, especially those in poor countries that increasingly rely on imports. Meanwhile, organizations like the World Bank keep pushing for increased production for export for international markets, further limiting that amount of land under cultivation for local markets. This puts people in poor nations at further risk of food insecurity. The IPS article explains:

Under the guise of investing in agriculture, huge amounts of money are being offered to debt-ridden countries in exchange for long-term leases to their foodlands. "Our research shows that the most fertile lands are being secured. There are huge issues around governance and corruption in this land grabbing," said Anuradha Mittal of the Oakland Institute, a U.S.-based policy think tank on social, economic and environmental issues.

More than 100 billion dollars has been invested in buying farmland since 2008, mainly in Africa by foreign companies and foreign-state owned industries, according to GRAIN, a small international non-profit organisation that works to support small farmers. This massive investment hasn't yet translated into more food availability.

Meanwhile, in its recent policy brief on the issue, the FAO calls for the creation of "safety nets" for times like these, when market volatility leads to price spikes in food staples. This does little to address the root of the problem, and serves to normalize and approve of such global profiteering by the corporate elite.

Read the entire IPS article here>>>

Read the entire Forbes article here>>>

Read the FAO Policy Brief here>>>

Photo Credit: the Business Insider; Activists shout slogans as they hold portraits of India's ruling Congress party President Sonia Gandhi and Prime Minister Manmohan Singh during a protest against hike in prices of essential commodities in Hyderabad, India, Monday, Jan. 10, 2011. (AP Photo/Mahesh Kumar A)